Public Bill Committee

[Mr Edward Leigh in the Chair]
Written evidence to be reported to the House
EN 26 Dr Nick Eyre, University of Oxford 
EN 27 Renewable Energy Association 
EN 28 Independent Renewable Energy Generator (IREGG)

Clause 7  - Payments to electricity suppliers

Luciana Berger: I beg to move amendment 67, in clause 7, page 5, line 27, at end insert—
‘(1A) Provision made in this regard must include provision about a panel of independent experts to advise on the amounts to be paid.
(1B) Provision made in this regard must include a consumer representative.
(1C) The members of the panel of independent experts shall be appointed by the Secretary of State and shall comprise Chairman, a Consumer representative, a representative of the Authority and such other members as the Secretary of State may decide.
(1D) In appointing persons to be members of the panel of independent experts, the Secretary of State must secure, so far as practicable, that the Expert Panel—
(a) is independent; and
(b) is comprised of technical, academic, economic, legal and such other experts necessary to give the informed advice required.
(1E) The Chair of the panel of independent experts shall be appointed for a fixed period, specified in their terms of his appointment, but shall be eligible for reappointment at the end of that period.
(1F) Provision made in this regard must be laid before Parliament.’.

Edward Leigh: With this it will be convenient to discuss amendment 57, in clause 17, page 10, line 10, at end insert—
‘( ) The Secretary of State must convene a panel of independent experts to advise on the exercise of functions under this Chapter.
( ) The panel of independent experts must include a consumer representative.
( ) The minutes of meetings or reports by the panel of independent experts must be laid before Parliament within two weeks of their publication.’.

Luciana Berger: It is a pleasure to serve under your chairmanship, Mr Leigh. Amendments 67 and 57, in my name and that of my hon. Friend the Member for Rutherglen and Hamilton West, would make provision for an independent panel of experts to advise the Government on negotiations for contracts for difference and the setting of a strike price. Amendment 67 would allow for an independent panel of experts to be formed to offer advice on the setting of a strike price. The amendments together would allow for the members of the panel to be appointed by the Secretary of State. They would comprise a chairperson, a consumer representative, a representative of the authority—at the moment, that would be Ofgem—and such other experts as the Secretary of State saw fit to appoint.
When deciding on members of the panel, the Secretary of State would be required to ensure that the panel remained independent and that it was made up of technical, academic, economic, legal and other suitable experts necessary to give the level of informed advice that was needed. The members of the board would be appointed for a fixed term and would then be eligible for reappointment.
Amendment 57 would allow for the independent panel also to offer advice on the provisions in chapter 3 of the Bill, relating to the capacity market and making capacity payments. These amendments would offer transparency and expertise, and crucially they would offer protection for consumers. They differ from the Government’s plan to set up a non-statutory panel and would deal with the concerns that still exist that a non-statutory proposal does not go far enough.
An independent panel with a statutory basis is something for which many organisations have been calling. Only in December, the TUC made the point that as consumers, through levies on their bills, will fund much of the new investment, transparency and accountability are vital to ensure that there is consumer confidence in the contract-setting process.
We heard only last week in our oral evidence session from Pete Moorey of Which?, who said:
“There are a number of things that we would like to see. The first is on the independent panel of technical experts that is being established. We think it should be given legislative legitimacy, a clear role and responsibility and clear oversight; there should also be consumer representation on the panel, so consumers can feel assured.”––[Official Report, Energy Public Bill Committee, 17 January 2013; c. 130, Q374.]
In paragraph 134 of the report by the Select Committee on Energy and Climate Change entitled “Draft Energy Bill: Pre-legislative Scrutiny”, the Committee, too, recommended an independent body that should report to Parliament. It warned that the danger of the alternative would be as follows:
“The perception that decisions are being made ‘behind closed doors’ could be highly damaging to the low-carbon agenda and may further undermine consumer trust in energy companies. It is essential that the negotiations deliver, and are perceived to deliver, value for money to consumers. We recommend that an independent panel of experts should be appointed to oversee the negotiations and to report to Parliament on the adequacy of the outcome and value for money for consumers.”
All the individuals and organisations to which I have referred have stressed the importance of a transparent process in which consumers can have confidence. That is hardly surprising, given what we are asking of the public and the potential risk to which they could be exposed. The negotiation of strike prices and the setting up of a capacity market will have real knock-on effects on consumers. Those will no doubt be complex and technical negotiations, which will have to balance the need for investor certainty against protecting consumers. Opposition Members are greatly concerned that a panel without statutory underpinning will not be in a position to pass judgment properly on when that balance has been correctly struck. Instead of being a proper advisory body, it will be little more than a rubber stamp for contracts. That level of scrutiny is simply not enough. There needs to be clear oversight, especially as a miscalculation in the strike price or capacity payment will leave consumers literally having to pay the price through higher bills.
To guard against that, and protect consumers, what is needed is a body with a clear mandate and a basis in statute, on which there must be at least one consumer representative. The body has to offer real, meaningful advice, not just on whether a contract has been drawn up correctly but on whether it offers value for money for consumers. Given the importance to the consumer of getting the strike price and capacity payments right, surely it is right that some form of independent expert oversight is applied to those amounts. That can be done only by experts who collectively have a broad range of knowledge and the experience needed to be able to step in before a contract is signed, thereby preventing a strike price from being set too high. But it is not simply that the panel needs to be a truly independent body; there is also an issue about the timing of their advice. It is crucial that the panel is consulted before a contract for difference or capacity payment is signed and agreed, and that it has some sort of oversight.
Independent oversight is needed because strike prices will not be made public before contracts are signed. Without that oversight, as the pre-legislative scrutiny Committee warned, we could find that negotiations take place behind closed doors and the public’s trust in that process is seriously undermined.
The amendments seek to build on the Government’s intention to set up an advisory panel. They would guarantee that the panel that is set up was independent and transparent, with a wide range of expertise, and, most importantly, that it would be charged with ensuring that consumers get a fair deal. I sincerely hope that we can find agreement across the Committee on the amendments, and look forward to the Minister’s response.

Barry Gardiner: It is a pleasure to rise to speak under your Chairmanship today, Mr Leigh; I gather that we are going to continue to have that privilege for the next few days, as Mr Bayley is not on these shores.
The headline message in the executive summary of the report on its affordable energy campaign that Which? published in December is clear:
“The intense financial pressure that persistently rising energy prices are putting on already hard-pressed consumers demands visible action.”
That financial pressure goes to the heart of the amendment tabled by my hon. Friend the Member for Liverpool, Wavertree, and that visible action is what she is calling for. Her amendment would make sure that an expert panel included representatives of those hard-pressed consumers, to make sure that the consumer voice is heard.
Almost 15 years on from its introduction, and in stark contrast to the aim then, the current regime of competition in energy is failing consumers. Despite energy prices consistently being their No. 1 financial concern, around three quarters of consumers are paying more than they need to on expensive standard tariffs, a collective overpayment that is estimated to be some £4 billion annually. If ever there were a reason to pass these amendments, that is it: £4 billion of needless excess payments that the consumer is being burdened with, at a time when up and down the country people who are in fuel poverty—a situation that is increasingly the case—feel they are disempowered and do not have a voice.
The Government have recognised that there should be a panel, but it is absolutely essential that, on that panel, there should be strong representation for people who are in fuel poverty. In Britain today, the average dual fuel energy bill is £1,336 for standard credit customers —those paying quarterly by cash or cheque—and it is £1,244 for those who pay by monthly direct debit. According to the Department of Energy and Climate Change, gas prices doubled between Q1 2006 and Q2 2012, while electricity prices doubled between Q1 2004 and Q2 2012. Wages have not kept pace with energy price increases, and that has increased fuel poverty. DECC estimates that 4.75 million households in the UK were in fuel poverty in 2010. That is a reduction on 2009 when there were 5.5 million, but that is the only downward blip in an otherwise constant annual increase since 2004 when there were just 2 million. It is now estimated that that figure will grow to 9.1 million by 2016.
According to the Government’s own figures, 9.1 million households in this country will be in fuel poverty by 2016. That is unacceptable. I know that the Minister also believes that to be unacceptable, but that is why it is vital that what my hon. Friend has pinpointed in the amendment is adopted by the Government. Those 9.1 million households need representation; they need to have their voice heard and the provisions of the amendment will make sure that they do.
There is some evidence of declining competitive intensity in the UK energy market. The pre-tax and investment UK profits of the big six energy companies increased by 36% between 2008 and 2011: from £6.67 billion to £9.09 billion. Is that not a neat symmetry—9.1 million households are in fuel poverty, while the big six energy companies—

Edward Leigh: Order. I am sure that the hon. Gentleman, who is a skilful Member of the House, will constantly refer back to the need to have experts on the panel and will not just debate energy matters generally.

Barry Gardiner: Mr Leigh, this is why I was so delighted to see you in the Chair this morning: I knew that you would keep me absolutely to the point. You are entirely right. That is why experts on the panel need to bring those particular points to the attention of Ministers: to make sure that the voice of people, who are suffering though the neat symmetry I referred to of £9 billion of profits for the big six when 9 million will be in fuel poverty, is heard. There needs to be balance of representation on that expert panel.
The consumer’s voice is essential here, because at the moment there is a great mismatch in what is going on. What my hon. Friend outlines in these amendments is directed to remedying that particular problem.
In proposed new subsection (1C), it says:
“The members of the panel of independent experts shall be appointed by the Secretary of State and shall comprise Chairman, a Consumer representative, a representative of the Authority and such other members as the Secretary of State may decide.”
That makes it clear that a consumer representative, next to the chairman, would be the most important voice to have on the expert panel. Of course, there would be representation from the authority, which would be provided by Ofgem at the moment. I note that my hon. Friend was careful to add that that would be Ofgem “at the moment”, which paid deference to Labour’s proposal for a change in the regulator following the next election. I will not, however, go down that rabbit hole. I am afraid that Ofgem’s voice has not been strong enough. When it threatened to make a referral to the Competition Commission in 2008, it clearly did not do so. Many of the consumer organisations and experts who would be on the panel if the amendment were accepted called on Ofgem to make precisely such a recommendation to the Competition Commission, but it did not do so. The amendment would give a much stronger basis for balancing the weakness in the authority and ensure that consumer voices were properly protected in the heart of the arrangements.
I welcome and am pleased to support the amendments proposed by my hon. Friends on the Front Bench. I trust that when the Minister responds to the points made by my hon. Friend the Member for Liverpool, Wavertree, he will wholeheartedly embrace the need for proper consumer representation at the heart of the expert panel.

John Hayes: It is a delight to welcome you, Mr Leigh, to the Chair and to be able to report that our scrutiny thus far has been conducted without rancour, has been thorough and has been enlivened by the contributions from Back-Bench members of the Committee. You add to our affairs. You bring that mix of powerful insight and old- world charm which does so much for the Committee. I am delighted to serve under you, Mr Leigh.

Edward Leigh: Order. I warn the Minister that he will not get round me with that sort of flattery.

John Hayes: But Chairman, I know you admire me for trying.
I am grateful to hon. Members who have contributed so far. The amendments are helpful in exploring the character and role of the panel of experts that the Bill proposes. The Government agree, in essence, that there should be broad consultation and transparency for the effective delivery of the reforms. We of course also agree that consumer interest must be at the heart of that, which is the point made by the hon. Member for Brent North and the shadow Minister, the hon. Member for Liverpool, Wavertree.
In relation to amendment 67, it is imperative that suppliers are fully aware of how money to be paid to them, from the contracts for difference counterparty, is calculated. There will be a set of formula for that calculation, which will be set out in secondary legislation. Consequently, it should not be necessary to create a panel of technical experts to advise on the amount of money paid to suppliers.
In addition, following this month’s call for evidence on the Government’s proposed approach to the supplier obligation, we intend to consult in the autumn on the detailed design of the payment model, including the formula, which the amendment addresses. That will provide stakeholders with an opportunity to comment on the formula before regulations are finalised. I emphasise that we see this as a consultative process, for the very reasons that are behind the amendment.
On amendment 57, we are keen to take an open and transparent approach to the development of the capacity market. In addition to two consultations, held in December 2010 and July 2011, my Department is working closely with an expert group to refine the design of the capacity market. That group includes a consumer representative, for the reasons set out in the arguments made so far.
As the Committee knows and as I have reported, we have committed to publishing our detailed design proposals for the capacity market in May and to a further public consultation on the detail of capacity market design later in the year. I expect that to be in the autumn, in advance of finalising regulations, code and licence changes to implement the capacity market. I anticipate all that taking place during the passage of the legislation. That will provide an opportunity for all stakeholders to give views on the detailed design of the scheme and to ensure that all interests, including those of consumers, are appropriately represented. The outcome of the consultation will be reflected in the regulations that we lay before the House in due course.
We also intend that significant changes to the capacity market will be subject to appropriate consultative procedures, taking into account existing electricity market precedents. Furthermore, we have committed to appointing a panel of technical experts to provide independent advice, as already discussed, to the Secretary of State following its scrutiny of the analysis that will underpin the implementation of the capacity market, in particular on the volume of capacity that we seek to put in place.
While the shadow Minister was speaking, I took a look at the invitation to tender to be part of the process and I can tell the Committee that the purpose of the panel will be to
“scrutinise some of the technical parameters which will be used in the analysis (for example assumptions and the modelling techniques), make an assessment of the process that the System Operator followed (for example, that appropriate stakeholders were engaged and appropriate internal governance processes followed)”
and to
“report to Government informally throughout the process and provide a formal report to Government when the System Operator provides analysis to Government (two discrete points in Spring 2013 and Autumn-Winter 2013).”
On that, it is probably worth my saying that, throughout the scrutiny so far, hon. Members, particularly the shadow Ministers, have made important points about transparency and reporting to Parliament. I am extremely conscious of the salience of those points and, as I said, it is vital that the Bill includes several provisions on this subject.

Albert Owen: I, too, welcome you, Mr Leigh, and I know that you will be fair and balanced in your chairmanship.
The Minister outlined what he expects from the technical experts. Will he explain why he does not think that someone from a consumer group could hold people to account in the way that he suggests? He and I know that we need consumer engagement in the process to ensure openness and honesty. Having someone from a consumer group would give us exactly what we want.

John Hayes: As I said already, consumer groups will be engaged, but EMR has an effect on both business and range of other consumers and has a key part to play in our national well-being. The hon. Gentleman is right that consumer contribution to the debate is of great value, but I emphasise the following as it may be helpful in precisely answering his question. The panel’s remit will be
“only to scrutinise the analysis produced.”
We are clear that the panel’s job is not to invent its own policy or even to contribute to the Government’s development of policy. Its function is highly technical; it is not about policy formation or even about effects in those terms, but rather to scrutinise and to check the analysis. To that end, it is surely right that we target the people best able to add to that technical analysis.
To be clear on consumer interest, we are keen for consumer views to be considered appropriately in the delivery plan—the end of the process—and we are keen that, although the plan is about the effect, the involvement takes place before the Secretary of State makes a final decision. We may be discussing a process that has both an inception and an effect, but it is important that we gauge the effects, after discussion with consumers, before final decisions are made. That is why we have said that we will consult publicly on the draft plan. The draft EMR delivery plan will be the subject of consultation, and it is absolutely right that, as part of that consultation, individual consumers and consumer groups are fully and properly engaged.

Barry Gardiner: Let us be clear: the Minister is talking specifically about the panel as it relates to the capacity market, rather than to the strike price. He has to provide separate answers on that. However, he and I know how Government consultations can be conducted. The Government reach a view on what they want. They then consult on it for a period, and consumer groups, like anyone else, can comment. At the end of that period, the Government proceed, basically, with what they decided to do in the first place.
Let us not beat about the bush: we have all criticised the Government—sometimes from within, sometimes from the Opposition Benches—for doing precisely that. Therefore, it really is no comfort to the 9.1 million households that will be in fuel poverty by 2016 to say, “When we experts have conducted our scientific analysis and economic calculations, we will put to you something that we can just railroad through.” If the Minister really wants—

Edward Leigh: Order. Interventions must be brief, sharp questions.

John Hayes: I will say a word about the hon. Gentleman’s perspective, because he brought a useful insight to our affairs regarding fuel poverty. He was very straightforward about this: fuel poverty rose dramatically while the Labour party was in government and, indeed, while he was a Minister. He was frank about that: he said that the trend since 2004 had been an unhappy one. He also generously acknowledged that I am profoundly concerned about that, as he is.
The hon. Gentleman is right that the consumer view is critical, not least because of the connection to fuel poverty and the interests of the most vulnerable consumers. I understand his motive in making that argument—it is entirely noble—but there is a distinction to be drawn regarding what is a highly technical function. In fact, we were clear about that in the document that I mentioned. By the way, Mr Leigh, in the spirit in which I have tried to conduct our affairs, would it be helpful if I sent a copy of that document to all Committee members, because it is important that our scrutiny is as well informed as possible? That document makes it clear that
“members of the Panel will not be expected”
necessarily
“to agree with each other. Any differences should be recorded… The Panel’s remit will be only to scrutinise the analysis produced. It will not be asked to produce additional analysis or to comment or advise on the policy decisions”.
This is a purely technical function. The panel of experts will have a specific technical job to do, so it will not be invited to offer views on effect, however valid those views might be. It is not there to represent a particular interest.
My judgment is that separating the exercise of expertise from the proper debate about effect, which the hon. Members for Ynys Môn and for Brent North have drawn to our attention, is absolutely the right thing to do. However, I assure the shadow Minister that the consultation on the draft EMR will allow exactly that proper discussion of viewpoints that reflect issues of profound concern, such as that raised by the hon. Member for Brent North.

Barry Gardiner: I am grateful to the Minister for his explanation and for his quotation from the document. He has presented things in a way that says, “Look, all we’re doing here is a mathematical calculation. All we want the panel of experts to do is to check whether our two and two does in fact make four.” However, it is not that simple. The calculation will have effects, as acknowledged in the part of the document that he quoted. Different experts may take different views, and where they do, as he rightly said, those views should be stated clearly and conveyed clearly. This is not just a checking exercise on the maths. Nor has he satisfactorily responded to the question from my hon. Friend the Member for Ynys Môn about why a consumer organisation might not be able to produce a technical expert equally competent to look over the analysis that has been done.

Edward Leigh: All right, that is the question.

John Hayes: Let me be even more helpful by being clear about the kind of people we expect to serve on this panel. The requirements are set out clearly in the document, which I said that I would make available to the Committee. The range of necessary knowledge, experience and skills is listed to include:
“Knowledge of low carbon generation technologies and operations;
Professional skills including modelling, economics, engineering, finance and investment analysis;
Past experience in the electricity market industry and experience of strategic decision-making in energy markets.”
That draws people from a relatively narrow segment. We want to draw the best experts that are available to do the job.
I emphasise two things. First, the panel’s role is highly specific and applies to both CFD strike prices and the capacity market. Secondly, we are legally obliged to take all views received in a formal consultation into account. So when we come to the consultation on the draft, we have a legal responsibility to take all views into account, including, of course, the consumer view and the views of those whose purpose is to champion the cause of the fuel poor.

Luciana Berger: Yes, of course, the Government are legally obliged to take into consideration the views of anyone who would make a submission to such a consultation. I reiterate the comments made by my hon. Friend the Member for Brent North: although the Government might take those views into consideration, they might ultimately seek to refer back to what they originally intended. The Minister has focused mostly on the capacity market element. Will he talk in some detail about how that relates to the strike price?

John Hayes: Well, I did say that the panel of technical experts would play exactly the same role in scrutinising the analysis, both to the capacity market and the CFD strike prices. So the distinction I described around expert opinion and the wider consultation applies to our EMR plans more widely than just the capacity market.
I can tell that I have not yet persuaded the Opposition. I can just feel that; it is more of an instinct than anything else. I was beginning to say that, throughout the Committee so far, the consistent theme of all its members—this is particularly true of the Opposition Front Benchers; I make no bones about saying that—has been a determination to ensure absolute transparency, parliamentary scrutiny and so on. That is very much in accord with my own view.
I have already said that we have agreed to review our arrangements five years after Royal Assent and that any investment contracts under schedule 3 will be laid before Parliament. I have also made public commitments to publish annual updates on the EMR delivery plan. I mentioned those during our last sitting. However, I am inclined to take the view that we should consider further advances, and I will do so during the passage of the Bill.
I expect to consider these matters further before Report, with a view to providing further comfort that Parliament will continue to have full visibility on the implementation of the electricity market reform. I want to be even more helpful in specific relation to these amendments, given the persuasive arguments of the shadow Minister and the hon. Member for Brent North. I make no distinction. I have no favourites, unlike Bruce Forsyth.

Albert Owen: Is it not a part of the problem though that the Minister refers to documents that we in the Committee have not had sight of, and is the information available on the website, given that we are asked to scrutinise this very important Bill? Amendments are being proposed, and he says that we might have the information in the near future. That is part of the problem.

John Hayes: I happily confirm the information is available on the website. I was offering to send it in hard copy form, merely for the convenience of the Committee. I think that even when things are published, it is useful to be sent a copy as well, when we are debating them in Committee. Heaven knows, I am surrounded by hard copies.

Alan Whitehead: I am pleased to hear that the document is on the internet, but is the Minister aware that just as the Committee started its proceedings the entire DECC store of documents was migrated from the DECC site to the gov.uk site, resulting in the loss of many documents, some of which are quite important to the discussions that we are having now? I spent half an afternoon yesterday trying to find one document on the web; it had just disappeared into thin air. I do not think that that is a good way to proceed, given what is necessary for the Opposition, at least, to debate these issues properly. So I am pleased to hear the document is on the net, but I would like to know whether it is actually there, rather than having been migrated into cyberspace, there to be found in some search in a month’s time, or put back by someone who realises—perhaps too late for our discussions to bear fruit—that a number of documents have disappeared.

John Hayes: Even a Minister of my perspicacity cannot be expected to compensate for all the failures of the modern age. I take seriously the point that the hon. Gentleman has made—so seriously that, with your indulgence, Mr. Leigh, at the beginning of this afternoon’s sitting, I will bring a further report on that, because it would be quite unacceptable if members of the Committee and other hon. Members were unable to access important documents during the consideration of the Bill. I will speak to my Department after this morning’s sitting and say a word about that at the beginning of the next sitting, to ensure that hon. Members have access to all the necessary materials on the website.
I was about to come to my exciting climax, but I am always happy to give way to hon. Members. I am very happy to say, drawing into sharp focus the commitment that I made a moment ago, that the two reports that I mention will be brought by the panel to the Department, and I am absolutely happy to make copies of those reports available to all hon. Members. That is what Governments should do, and what this Government, as far as I am concerned, will do. With those assurances, I hope that hon. Members will be reassured and that the hon. Lady will withdraw the amendment.
 Barry Gardiner  rose—

Edward Leigh: Is this an intervention or a speech?

John Hayes: I had not quite sat down.

Barry Gardiner: I am happy to make it an intervention.

John Hayes: I was in a kind of limbo.

Barry Gardiner: I am grateful to the Minister. He is genuinely trying to be conciliatory, and I think that we all understand and appreciate that. He has highlighted though—I am going back to his substantive remarks about the composition of the panel—his view that it should involve experts in the structuring of markets and so on. What I found striking about that was the idea that the voice of the consumer has no legitimate role in the structuring of those markets. He has offered to consider these matters further during the consideration of the Bill—an important concession—but it is essential when talking about who is on that panel and how they look at the analysis of the market structure that the consumer voice is represented there.

John Hayes: Although the hon. Gentleman is not known for being a man of few words, he has made his point, and I really have nothing to add.

Luciana Berger: I thank the Minister for his comments. Our discussions this morning have so far been helpful and constructive.
I echo my hon. Friend the Member for Brent North in that the purpose and motivation behind the amendments was to speak on behalf of the estimated 9.1 million homes that may be in fuel poverty by 2016, and on behalf of the average household, which is spending between £1,300 and £1,400 a year on their dual fuel bill and also facing future price increases. Bill payers up and down the country are expected to shoulder the cost of the Government’s proposals, which is into the billions of pounds.
I listened carefully to what the Minister said about the further consideration he and the Department will give to creating a panel and who will be on it. Again, I echo the comments made by my hon. Friend in his intervention because it is important to include not just those who have expertise and experience from being in the electricity market, but those who have an outside view and will see just the end result—the cost of the bill every month.
The Minister made some helpful suggestions and I welcomed the spirit in which he made his remarks. I look forward to the two reports he said that he would share with the Committee being made available. On the basis of our discussion so far and in expectation of further considerations by and proposals from the Minister, I beg to ask to leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Luciana Berger: I beg to move amendment 68, in clause7,page5,line33,at end insert—
‘(3) Regulations by virtue of subsection (1) shall make provision for—
(a) the recovery by electricity suppliers of any amounts paid to a CFD Counterparty by virtue of section 5;
(b) the return by electricity suppliers of any surplus paid to them by a CFD Counterparty by virtue of this section;
(c) provision made by virtue of paragraph (a) in this section shall include provision on any recovery from customers; and
(d) provision made by virtue of paragraph (b) in this section shall include provision that any surplus be returned to customers.’.

Edward Leigh: With this it will be convenient to discuss the following:
Amendment 49, in clause8,page6,line4,leave out
‘or not to be paid, into the Consolidated Fund’
and insert ‘to consumers’.
Amendment 69,in schedule 3, page103,line41, at end insert—
‘(1) Regulations shall make provision for—
(a) the recovery by electricity suppliers of any amounts paid to an investment contract Counterparty or a CFD Counterparty by virtue of paragraph 7;
(b) the return by electricity suppliers of any surplus paid to them by an investment contract Counterparty or a CFD Counterparty by virtue of paragraph 8;
(c) provision made by virtue of paragraph (a) in this section shall include provision about recovery from customers; and
(d) provision made by virtue of paragraph (b) in this section shall include provision that any surplus be returned to customers.’.

Luciana Berger: The purpose of the amendments is to ensure that the interests of consumers are protected, which was a theme of previous amendments and one that will run throughout many of our discussions in the coming weeks. The amendments would establish two-way CFDs and investment contracts, whereby money flows from consumers and also back to them.
As my hon. Friend the Member for Rutherglen and Hamilton West has already said, Labour Members support the principles behind CFDs. If they are executed correctly, they should provide the long-term certainty that investors need so that we keep our lights on and reduce our carbon emissions in an affordable way. However, we are deeply concerned that the Government’s proposals represent a one-way street, as consumers are asked to foot the bill when the reference price is above the strike price, but do not receive anything back if the strike price is above the reference price.
Amendment 68 would change that balance and ensure that money is returned to suppliers from the counterparty and then passed on to consumers, rather than simply going the other way. Clause 7(1) states:
“Regulations may make provision about the amounts which must be paid by a CFD counterparty to electricity suppliers.”
However, the Bill does not guarantee that that will happen, and nor is there any requirement for the electricity supplier to pass that money back to consumers. That situation is very different from the Government’s original description in 2011 of how they envisaged CFDs. Page 38 of the EMR White Paper of July 2011 states:
“A ‘two-way’ FiT CfD provides for payments to be made to a generator when the market price for its electricity (the reference price) is below the strike price set out in the contract. However, when the reference price is above the strike price, the generator pays back the difference. That is, generators return money to consumers if electricity prices are higher than the agreed tariff.”
It is disappointing that that original vision has not been realised in the final Bill. However, with the spirit of the cross-party co-operation in which the Minister said that he hoped that the Committee would be conducted, perhaps we can resurrect that initial sentiment expressed in the 2011 White Paper. If we are to do so, however, clause 7 will need to be strengthened significantly.
Amendments 68 and 69 would achieve that by establishing a guarantee that funds are returned to the counterparty and, crucially, that the counterparty returns that money back to consumers. That is an important principle. Given that the Government are ultimately asking consumers to bear the costs of CFDs and investment contracts through a levy on all our bills, surely it is right that they should ensure that people are not asked to pay more than is needed and that, if that happens, they are reimbursed. At a time when millions of people are struggling to keep up with their energy bills—we have heard the figures time and time again, but it is useful to reiterate them: bills have risen by £300 since 2010, with the average dual fuel bill now reaching £1,400 a year—it is imperative that consumers get a fair deal, so surely that must be one of the Bill’s top priorities.
As well as ensuring that bill payers do not pay more than they need to, we also need to make sure that money is returned to them. That must be enshrined in the Bill because, sadly, all too often energy companies have proven that they cannot be trusted. A recent study by the IPPR showed that as many as 5 million households were being overcharged by their suppliers, with some paying £300 a year more than necessary.
We also see that lack of trust with wholesale costs and consumers’ bills. When the wholesale price goes up, energy companies put their prices up like a rocket, yet when the wholesale price comes down, bills fall like a feather, if at all. We cannot allow those mistakes to be repeated with CFDs and investment contracts.
The system that the Bill puts in place must be transparent and fair—fair so that consumers are not asked to pay more than they have to, and transparent so that we can all see that they are not. Those principles must also be part of how payments are distributed back to consumers via their energy bills. Organisations such as Which? have proposed that that could be achieved by returning any surplus to consumers according to their electricity use, meaning that those who use more, and therefore pay the most, would receive the most back. I will be interested to hear the Minister’s views on that specific proposal.

Albert Owen: My hon. Friend is making a good case. When she talks about compensation to “customers”, she must be including small businesses, because they have tight margins. When prices go up, they have to reconfigure their businesses accordingly, so when prices go down, they need that surplus.

Luciana Berger: I thank my hon. Friend for his helpful and important intervention. When I talk about bill payers, I mean not just householders, but anyone who pays an electricity or gas bill, which includes small and medium-sized companies, as well as big companies. After speaking to SMEs in my constituency, I know how fuel prices impact their business, so this is crucial to them.
The amendments are crucial if the Bill is to put in place finance mechanisms that are transparent and fair to the consumer. They would bring the Bill closer to what the Government originally said in the White Paper that they wanted to create. They would change CFDs and investment contracts from a one-way agreement, under which the public are asked to bear huge risks with little to ensure that they are not paying too much to generators, into a fair, two-way agreement under which bill payers are protected from paying more than they have to. Again, in the spirit of co-operation, I hope that the Government will share our view and support the amendments.

Tom Greatrex: It is a pleasure to serve under your chairmanship this morning, Mr Leigh, as it will be in the days ahead, as others have said.
I shall speak briefly to amendment 49, which would amend clause 8(4). The subsection contains a provision that allows the Treasury to take any surplus held by the counterparty, rather than any such surplus, should there be one, being passed back to the consumers who paid for it in the first place. I anticipate that the Minister will argue strongly that that is not the Government’s intention but, as we know from some of our previous discussions, policy intention and the Bill’s wording are not necessarily the same thing, so we tabled the amendment to seek clarity.
As the amendment makes clear, we believe that, rather than allowing any CFD surplus to be taken by the Treasury, it would be altogether fairer and more sensible for that money to be passed back to the consumers who paid it in the first place. As my hon. Friend the Member for Ynys Môn said earlier, when we refer to “consumers”, we are including businesses as well as domestic households, as businesses also pay these bills.
The draft Bill did not contain a clause similar to clause 8, so the Select Committee did not have the opportunity to scrutinise such a proposal. Will the Minister explain why it appeared only late on and tell us the reason behind its addition? I know that he has very good relations with the Treasury, but I cannot help but be suspicious when any piece of legislation or Government documentation contains a reference to the Consolidated Fund.
During the evidence sessions, consumer groups expressed concerns about the impact of clause 8 on consumers. The Committee will recall that Richard Hall of Consumer Focus argued, albeit with a qualification, that,
“as long it is not such a nugatory amount of money that the admin cost exceeds it, it would seem prudent to have an approach that allows for those moneys to be given back to consumers rather than to the Treasury.”
That point was echoed by Pete Moorey of Which?, who said:
“It would seem logical for that money to return to consumers rather than to the Treasury.”––[Official Report, Energy Public Bill Committee, 17 January 2013; c. 133, Q382.]
When I read clause 8, I tabled a written question to determine whether the Government had made any assessment of the potential revenue that could accrue from the clause. It turns out that no such assessment has been made, but that lack of modelling heightens my worry about the possible effect of the clause. In the written answer to my question, the Minister argued:
“Clause 5 of the Draft Energy Bill sets out that the supplier obligation regulations are made for the purposes of enabling payments of CfDs and funds can only be collected from suppliers for this purpose or for funding the costs of the body. It would therefore be unlawful for them to be used to generate revenue to be retained by the Exchequer.”
However, the dispute is not whether it would be lawful or unlawful for the Exchequer to use clause 5 for the purposes of raising revenue—I accept that the Bill does not appear to allow for the use of the clause for that specific reason—but whether clause 8(4) allows the Government to use any surplus held by a CFD counterparty. In the same written answer, the Minister went on to say:
“The Government is considering implementing a variable rate obligation”,
which would result in no
“surpluses or deficits in the amount of payment collected from suppliers”.
The argument is that such a measure
“minimises the need for adjustment payments.”—[Official Report, 14 January 2013; Vol. 556, c. 482W.]
He also reiterated the Government’s policy intention that the CFD will not raise revenue for the Exchequer. If that intention is indeed the case, I would argue that the Minister and the Government would concede that there is no purpose to clause 8(4), and thus no reason to oppose amendment 49.
I know we are pressing to make some progress, but will the Minister tell us when clause 8 was added to the Bill? Why was it not included in the draft Bill, because that meant that the Select Committee was unable to scrutinise it? If it would be unlawful for the Government to use the supplier obligation to raise revenue for the Treasury, and if, furthermore, the Government have absolutely no intention of using the clause to take money from the CFD counterparty to the Treasury, what is the point of it, and what will be the circumstances in which this power would be used? Does he accept that, under this power, it would be possible for the Treasury to take a surplus held by the counterparty? I reiterate that I do not doubt the Minister’s good intentions and the intent that he and his ministerial colleagues have expressed regarding the purpose of the Bill, particularly this aspect.
There is always a concern, however, with such legislative provisions, because they may be used by not today’s Treasury, but tomorrow’s Treasury. At some point when it is on the hunt for revenue and ways of retaining moneys, the clause could be helpful to those who are instructed by their political masters to find ways of raising additional revenue or retaining it. Given that this revenue comes directly from consumers in the first place, that is a considerable and serious concern. This is a serious amendment and I look forward to the Minister’s response to my points.

Alan Whitehead: I am sure that hon. Members have all either used or observed the machines on the end of piers in which if someone drops some loose change at the right point, a shower of 2p pieces comes into their lap. The machines have a series of coins at the bottom of where the money is dropped, and the 2p coins are nudged towards the player, who then wins them—except they do not, because, unknown to them, most of the 2p pieces disappear down a hole at the side of the machine and the amount that is won is only a small proportion of what has actually gone into it. Small children across the ages have been completely duped by this process. I am amazed it is still legal, but there we are.
At first sight, clauses 7 and 8 appear to be something of an end-of-the-pier-machine provision. Contrary to widespread opinion, CFDs are a two-way street. They are devised to work on the basis of a strike price and a reference price, and the two work in harness with each other. In theory, should the reference price go above the strike price, the supplier is obliged to pay back some of the money that they otherwise would have received from the CFD over the previous period.
That mechanism creates a number of complications. If the supplier considers that he or she may be required to pay back some of the CFD money that they previously received as a result of the strike price and reference price going against each other over a particular period, they will inevitably hold what we might call hedging money, which will be money to cope with possibly having to pay money back. They may claim—this relates to the rocket and feathers analogy drawn by my hon. Friend the Member for Liverpool, Wavertree—that as they need to retain a sum to pay back what they have received under the CFD, they need that hedging money to be reflected in the prices they charge to underpin the existence of that back-up fund.
Although the Department set out in the draft legislation and the White Paper the notion that a fundamental feature of CFDs would be that the process would be a two-way street and that money would be paid back, I do not think that anyone has taken that possibility especially seriously in the analysis that has proceeded since. All the material presented subsequent to the initial modelling of how CFDs would work has made the assumption has been that there would virtually never be a circumstance in which payback would take place.
As an illustration of that, we need merely to turn to figure 4 in the draft Energy Bill, which I am pleased to say is still on the internet and therefore available. Some of the impact assessments are not, but that is by the bye. Figure 4, which illustrates how the reference price and the strike price would work against each other, has been placed in the draft Bill on the basis of what might have happened over a period had reference prices and strike prices been in place historically between the years of 2000 and 2010. It shows that, with the exception of one short period between 2008 and 2009, the reference price and the strike price are always in balance. That is to say, the strike price is always above the reference price and therefore no one ever pays any money back. The suggestion at the very least from that figure and from other analysis is that therefore that is a very occasional occurrence, but of course, as we know, history is not symmetrical. What is likely to happen over the next period is not what has happened over the past period in relation to energy prices and what strike prices and reference prices would look like.
What is likely to happen over the next period is that prices will be much more volatile, and therefore the occasions on which the strike price and the reference price would not be in balance with each other will be far more frequent. To demonstrate the stability in terms of reference prices and strike prices historically has only limited value when we are discussing what will happen in the future. For that reason and for other reasons relating to what my hon. Friend the Member for Liverpool, Wavertree mentioned, it is much more likely, over a period of time, that this will not be a theoretical problem with how CFDs work, but will be a practical problem in terms of a substantial two-way flow of funds going backwards and forwards from the CFD operator to the suppliers and back again.
The questions of, first, accounting for what the funds will look like and, secondly, working out their destination become a very real issue with regard to how the market works subsequently, because if money that is coming back from the authority to the suppliers first disappears into their coffers, that will not reflect what they have done in terms of their charges in order, first, to hedge against the possibility that that would happen and, secondly, to anticipate the fact that that might take place anyway, as far as customers are concerned. That is to say, they may well build in a margin, as far as their customers are concerned, over a period of time to deal with the possibility of that happening. At that point, those suppliers have no accountability for that built-in margin. Indeed, it underpins rockets and feathers, in terms of what happens to prices, over a period of time. That seems to me a pretty poor way of conducting public policy. There has to be some form of accountability.
The second issue is, as my hon. Friend the Member for Rutherglen and Hamilton West has pointed out, in relation to clause 8. Part of the money—we are back to our machine at the end of the pier—that you think you are going to win may actually get scooped up by the Treasury and put to other purposes. Then the ability of the market to reflect accurately over a period of time how prices will work against real energy costs, demands and outcomes is heavily compromised. At either end of the process, there appears to be a potentially unaccountable mechanism that works against the interest of customers.
One theme that runs through what we have been talking about on energy markets and energy supplies is the way in which the market will work for customers over a period of time. One argument that has been put forward for CFDs in particular is that they are better value—in terms of customer prices—than the previous arrangements. It would seem somewhat perverse if a good proportion of the benefit that should be coming to customers as a result of the change of arrangements was dissipated or nullified by subterranean arrangements. I urge the Minister to have a good look at how this works again, so that we can ensure that we know what we are doing as far as money to suppliers is concerned. As far as possible, we should ensure that we are not institutionalising rockets and feathers or the ability of the Treasury to operate an end-of-the-pier machine rather than a fair arrangement that benefits the customers on the operation of the market.

Barry Gardiner: I endorse what my hon. Friend the Member for Southampton, Test and the Front-Bench team have said on the amendments. I want to refer in particular to the points that my hon. Friend made about the asymmetry of history. I know that he has studied the Waterborne Energy report on world LNG estimated November 2012 landed prices map because he was given it at the same time as me. It shows a disparity in world LNG prices, between a high in Korea and Japan of $13.15 to a low at Lake Charles, USA of $2.95. That disparity has come about, as I am sure that the Minister will be keen to acknowledge and to point out, from the American discovery of shale gas and increasing US reliance on it. Increasingly, that has thrown the world markets into an asymmetric view of fuel prices, and it is completely disproportionate to what has gone before.
I speak not as a rampant supporter of shale gas. It is an interesting field that we will have to take account of, but from this country’s point of view, its benefits are very much unproven. However, what we will have to take account of in the way in which we structure our strike prices and our contracts for difference are the variabilities that will develop in the world market as a result of shale price in America; that is incontrovertible.
So, to see the modelling that has been done here on contracts for difference and, as my hon. Friend alluded to, the way in which there is always a continuity of those two parallel lines going forward into history would be entirely to misread what is going to happen. We will get an Everest and a K2 peak, and to correspond to that we need a trench down at the bottom. The key question that the Minister must answer here is to whom the benefit of that trench will accrue. There are three other questions. Does the Minister accept that, as things stand in the Bill, there is potential for the Government to use the power to take surplus held by the CFD into the Treasury? Is that the case?
Secondly, if the Minister has no intention of ever using that power to take that money back into the Consolidated Fund and back to Government, why does he not excise it from the Bill? Thirdly, does he agree that any surplus held, over and above that needed for the balance of payments, should go back to the consumer?
As things stand, my view is that the answer is yes. Yes to the second question on the part of the Minister, although if it were the Chief Secretary to the Treasury sitting in Committee the answer might be no. The third question, however, is incontrovertibly the basis on which the Government have said that we should adopt the CFD model. Precisely because we have said, “Look, we agree a strike price, which guarantees a decent rate of return to industry over a period of years”, if there should ever be a disparity between the strike and reference prices, there would be payback—money would come back.
Who has been paying out in the meantime? It is the customer, the consumer. Therefore, to whom should the payback be made? It should be made to the consumer, to the customer. All that the amendments seek to do is to clarify that position, to ensure that it is in the Bill and to ensure that the customer does not lose out to the Treasury.

Edward Leigh: I call the Minister. Perhaps we need not dwell too much on the end of the pier.

John Hayes: No. Seductive though the prospect of a journey on to the pier with the hon. Member for Southampton, Test is, I will not be adding to his metaphor.
I want to be clear about why we wish to retain the ability to specify what sums could go into the Consolidated Fund in regulations. The CFD counterparty body will not, as the Committee knows, be a profit-making organisation. Clause 5 sets out that supplier obligation regulations are made for the purposes of enabling payments of CFDs, and that funds can be collected only from suppliers for this purpose or for funding the costs of the body. It would therefore be unlawful, as the hon. Gentleman said, for them to be used to generate revenue to be retained by the Exchequer. I have the question he posed—he quoted from it earlier—and he is right; it would be unlawful for them to do so. I will say more, however, on the specific points made during the debate.
The Government are considering implementing a variable rate obligation whereby the precise amounts owed to the generators under the CFDs in a given period—such as a month—are collected by the CFD counterparty from suppliers as soon as possible after that period and passed swiftly through to generators. This would not lead to surpluses or deficits in the amount of payment collected from suppliers, and it minimises the need for adjustment payments. Again, we would therefore not expect supplier payments to go into the fund. That is the point made by the hon. Member for Southampton, Test when he argued that it was unlikely that such transactions would take place.

Alan Whitehead: I am pleased to hear that the work is possibly under way. The clause, however, was not before the scrutiny Committee, and nor are the workings, apparently, in any way to do with this Committee’s considerations. It would be nice to hear if they come out so positively, but we seem to have another example of material that is being undertaken behind the crest of the legislative discussions rather than ahead of it. That can only be to the detriment of our discussions and of reaching a successful conclusion in what the Committee decides.

John Hayes: I accept what the hon. Gentleman said, but this is complicated and the design requires much work. We issued a call for evidence to suppliers for exactly that reason, as he knows. Partly on the basis of the results of that call for evidence, we will do a detailed analysis of exactly the issues that he raised and to which I have just responded. It is important that the system works as smoothly as possible and minimises occasions when those payments might be made. The purpose of this part of the Bill, as I have said repeatedly, is not to raise revenue, as he and others have argued.
Let me explain why the provision was not in the draft Bill. The reason is that the Bill metamorphosed in relation to the character of the counterparty partly as a result of the scrutiny of the Select Committee. The hon. Gentleman is a member of that Committee and other members of it are here, too. As they will know, the Select Committee had particular things to say about the arrangements around the counterparty and the Government responded to them.
Indeed, because the counterparty is Government-owned, there is a risk that money would automatically be classed as hereditary revenues to the Crown and go automatically into the Consolidated Fund. This part of the Bill is designed to prevent that. It is a wholly technical provision and cannot be used for the purposes of raising money as suggested. It was not in the draft Bill because it is needed only because of the status of the Government-owned counterparty. It is intended to be used both to prevent money going into the Consolidated Fund, when it should not, and also to deal with the accounting costs of that body. So the purpose of this is merely to deal with those costs, not to raise large amounts of funds, and certainly not to raise revenue.

Q 1

Barry Gardiner: Forgive me, Mr Leigh. I may not be following the Minister carefully enough. He is trying to make it clear that this is not intended to raise revenue for the Consolidated Fund. But clause 8(4) says:

“Provision made by virtue of subsection (3) may include provision that sums are to be paid, or not to be paid, into the Consolidated Fund.”
If it is indeed his intention that sums are not to be paid into the Consolidated Fund, why has he not brought forward an amendment that takes out “are to be paid” and simply leaves in “not to be paid” into the Consolidated Fund?

John Hayes: Let me be clear, because the hon. Gentleman raised that earlier. It is true, and that is made clear in what I said in answer to the written question, that the money can be paid into the Fund, but only temporarily before dealing with the costs of the counterparty body. This is not meant as a means for the Treasury to take money from the system. It is a technical and administrative function, associated with covering the costs of the counterparty body.
Let me be clear again in summary. First, we are looking to a design which makes this very unlikely to occur, as the hon. Member for Southampton, Test argued. Secondly, when it does occur—it is a straight answer to the question: yes, the money can be paid into the Consolidated Fund—it is for the purposes of returning costs to the counterparty body. As I have said, this is complicated. We will design this carefully on the basis of the analysis which follows the results of the call for evidence. Of course we are interested in the effect of the proposed approach and supplier obligation on suppliers. We are seeking views on that basis. But in any scenario, it is not our intention that CFDs will raise revenue for the Exchequer.

Tom Greatrex: I do not think anyone on the Opposition Benches doubts the Minister’s intent, and we understand that it is not about raising revenue. The point is there is a difference between raising and retaining. If the purpose, as he has outlined it, is for the money to be held before it is paid again, would it not be better for there to be a different fund from the Consolidated Fund to ensure that companies and everyone is clear that this is not a way in which the Treasury can retain revenues which have come from consumers in the first place?

John Hayes: That is an interesting point but it would involve establishing an entirely separate structure. The Consolidated Fund is there and can be used for this purpose. Without being impertinent could I suggest a better intervention? We could look at the use of the word “retention”. The hon. Gentleman has a good point about whether this is money collected or retained. If it is collected for the person funding the counterparty cost, which it is, perhaps that needs to be explicit. The idea of “retaining” money may give rise to the impression —albeit misguided, as he acknowledged—that it is designed to act as a revenue-raising mechanism, which it is not.
I hear what is said about that, but the Government’s intentions are very clear in respect of the circumstances involved here. It does seem to be important, however, that we lay those intentions out in regulations, very much along the lines we have been discussing today. If those regulations make palpably clear that this is not about retention of funds, we can disabuse those—not anyone on this Committee—who might come to the mistaken view that this is about the Treasury taking money from the system in a way that it is not meant to be used for. So there is an argument about how we ensure clarity in the regulations around the point that has just been raised.

Barry Gardiner: I think the Minister has felt the force of the arguments put to him around these amendments. However, what we are considering here is what is on the face of the Bill. That power, for those moneys to be paid into the Consolidated Fund, is currently on the face of the Bill. The Minister is seeking to be helpful by talking about retaining moneys rather than raising revenues, and of course that is appreciated, but at this stage retention within the Consolidated Fund would not be adequate, in my view, for two reasons. One reason is that retaining moneys would have to have a time limit put on it, because they could be retained indefinitely. The second is that it would have to be specified that the moneys are eventually paid back to the consumer, because it is the consumer who paid them out in the first place. That needs to be stated explicitly. If the Minister can give us satisfaction on those points, not only on retention but on time limits and paying it out subsequently to the consumer, we may be able to make progress.

John Hayes: I have set out such circumstances where it may be appropriate for operational costs to be held in the Consolidated Fund, and for the CFD counterparty to be given a grant for the amount of their costs. We have set that out very clearly in regulation and I much appreciate the advice, which I think I gave myself, that “retention” is the key term. If I did give it myself, it was stimulated by the contribution of the shadow Minister.
The second issue, which is dealt with in amendments 68 and 69, involves the possible role of the consumer in all of this—the suggestion that this money is issued to consumers. We do not, frankly, intend to place additional regulation on suppliers, to practically force them to redistribute funds from generating back to consumers. That would need price regulation, which, as members know, is anti-competitive.

Luciana Berger: Will the Minister repeat his last couple of sentences, because I could not hear? I know we are all waiting for our lunch, but it was an important point.

John Hayes: When an hon. Member rises and asks me to repeat the important points, it is hard to know what they mean, because all the points I make are important.
I said that in the regulations that we issue, the concept of “retention” deals with the issue that this is money raised for a specific purpose. It should be made clear, in other words, that the Consolidated Fund is to act as a vehicle in the way I have set out. This is not about a fundraising mechanism for the Treasury. The use of the word “retention” is helpful in those terms. I will look at that closely. As I said, we will draw up the regulations carefully on the basis of the call for evidence and mindful of contributions made in Committee during this useful and important debate.
I then turned to the consumer interest, the point raised by the shadow Minister and the hon. Member for Brent North. I said that we were not inclined to force suppliers to distribute funds raised back to consumers. I thought that would effectively lead to price regulation, which would be anticompetitive. However, the CFD obligations will be the same for all suppliers and competitive market forces will apply. New suppliers will have a very strong incentive to use the funds to reduce consumer bills. We believe that the changes we are making to EMR to make the market more competitive will help to drive down consumer bills. Indeed, you will know, Mr Leigh, that the coalition Government are committed to tackling fuel poverty and supporting low-income and vulnerable consumers to heat their homes in an affordable way.
We are determined that, as well as leading to energy security, EMR should lead to bills being kept down. Regulations will also provide a duty on the CFD counterparty to return those sums to suppliers. The form and manner of the return will be considered and set out in secondary legislation, as hon. Members know. With those remarks, I trust that hon. Members will not press the amendments.

Luciana Berger: I do not wish to detain the Committee any longer than necessary. I have listened carefully to the Minister. Two things stood out. He used the word “unlikely”. Unfortunately, that does not give us sufficient reassurance. Further, he said that it would provide a “strong incentive”. Again, that does not compel or mandate. We have not said this issue is about raising revenue. Our concern remains about revenue being retained. My hon. Friend the Member for Brent North raised further points.

Alan Whitehead: From the supplier’s point of view the issue may relate to the extent to which suppliers may hedge, and hence obtain money from customers, against the possibility that they are going to pay back money at a later date; not that they know they are going to pay back money and not that they will. If those hedging funds that they retain in order to counter the possibility of paying back have been obtained from customers, it is important to know the destination of those funds, and whether they eventually go back to customers. That is not about price regulation; that is about the organisation of a reasonable pricing structure as far as suppliers are concerned. Does my hon. Friend agree that is an important point to consider?

Luciana Berger: I thank my hon. Friend for his important contribution and I agree. I do not think those points have been sufficiently addressed by the Minister. It comes back to protecting the consumer and ensuring that they are reimbursed if they pay too much.
I asked the Minister to repeat his comment—which he did again very quickly—about being anticompetitive. I was not sufficiently reassured by his comment in that one sentence. On that basis, I wish to press the three amendments to a vote.

Edward Leigh: The hon. Lady wishes to press all three amendments. We can take amendment 68 now because we have reached that part of the Bill, but we will have to take amendments 49 and 69 later.

Question put, That the amendment be made.

The Committee divided: Ayes 9, Noes 11.

Question accordingly negatived.

Ordered, That further consideration be now adjourned. —(Joseph Johnson.)

Adjourned till this day at Two o’clock.